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The upstart nation, part 4: The hallmarks of success

From drone technology to electric farm bikes and computer graphics, from space-age umbrellas to fitness trackers and the world's leading DJ software, New Zealand developers, entrepreneurs and companies are winning in areas where no one thought we could even compete. In this fourth extract from No. 8 Recharged, the follow-up to the successful No. 8 Rewired, David Downs & Dr. Michelle Dickinson show how the creative thinking that New Zealand has become renowned for is being expanded and improved.

Header image: Compac citrus packhouse

Whāia te itikahurangi: ki te tūohu koe, me he maungateitei

Seek the treasure you value most dearly: if you bow your head, let it be to a lofty mountain

While we researched the book, and talked to the many companies and entrepreneurs who shared their stories with us, we found common themes. One thing that was stressed time and again was the importance of a team of people, focused on a purpose, working collaboratively together. Most of the entrepreneurs we talked to prioritised the people they had around them over the technology they made and sold.

When it comes to choosing a product or market to focus on, there is no recipe for how to create a globally successful company from New Zealand, but there are certainly some emerging commonalities and hallmarks of success. These factors are consistent with the lessons learned by organisations that look across the economy generally, such as government agencies and ministries, and commentators.

NICHE-ORIENTED 

Taking a global view, even a small space can be a large opportunity for a New Zealand company, and focusing on niches seems to be a common successful approach. Niches are often overlooked by bigger players, but can provide a great market for a New Zealand company. There are hundreds of examples of companies taking the option to do one narrow thing extremely well, and then to dominate that niche. It requires discipline and focus to stay on course, and it’s not always necessarily intuitive business. Many entrepreneurs talked about being distracted by opportunities, but knew ultimately, they needed to stay simple and focused and ensure all their enterprise’s energy was targeting being the best they could be in the niche they were in. This approach allows a New Zealand company to be a big fish.

The niche approach nullifies one of the challenges of being from New Zealand: the scale factor. Going broad requires a large investment and an ability to compete and succeed across many fronts simultaneously. New Zealand businesses, in the main, don’t have that ability or depth of resource. Focusing on a niche allows them to compete at the right scale to be successful.

Image: Pacific Aerospace

GLOBAL THINKING

Many companies talk about how working in New Zealand has a tangible effect on them, because our domestic market is so small. Paradoxically, it’s both a challenge and a benefit.

The challenge is that the domestic market becomes saturated relatively early in the growth cycle, and the company is forced to trade internationally to keep growing. ‘They are hardly out of nappies and they need to compete globally,’ as one trade minister puts it. This means companies need to rapidly learn new skills and ways of working that they might not have the sophistication or experience for. Global competition is fierce, the skillsets required are more nuanced, time-zone and travel become factors. Government support and other help from the likes of Export New Zealand, The Icehouse, New Zealand Trade & Enterprise and, now, a growing list of exemplars and trailblazers before them, means New Zealand companies are well supported, but it’s still hard work.

The benefit, though, is for those who can cross that chasm, who can orient themselves to have a global view. Especially in the technology sector, it’s clear there is a large proportion of companies who are ‘born global’, in that they see the world as a potential market from day one. Global thinking means understanding there are differences in the way people buy and use your products, in the features required in the products themselves, in your ways of doing business. A big trend in the software space is to sell ‘software as a service’ or SaaS, a business model with a number of key attributes for globally aware companies, such as the revenue model (in itself interesting), and even more so the idea that customers now accept service delivery from ‘anywhere’. Being in New Zealand is no impediment to delivery for these types of companies, and in fact some companies talk about how New Zealand’s lifestyle and favourable time zones (spanning America and Asia every day) were a big advantage.

Global thinking doesn’t necessarily mean trying to be everywhere at once, however – outside the SaaS-style companies, most realise the need to pick markets and focus to avoid diffusion and stretching resources too thinly.

Image: Ubco Bikes

DESIGN-LED

The tools and ethos of ‘design’ seem well adopted in the successful technology sector. At the risk of offering another fuzzy definition, ‘design’ in this context includes empathy and understanding customers’ needs, thinking of the customer first, and tailoring the product to fit the customer and the market. Design-led companies generate different options for solutions to customer problems, and employ rapid prototyping as a way of developing new products and services. Some of the natural behaviours particular to the ICT sector become an advantage here.

This way of working and thinking has lately made its way into the mainstream, and the technology sector in particular seems ripe for adoption of design thinking. Done well, this approach allows for a more targeted and high-value approach. Design-led companies understand their customers’ needs better, and can demand higher margins or a premium for their products and services – again, this is a core hallmark of success. Cut-price products or adding low value to customers is a sure way to extinction, particularly when New Zealand companies can’t compete on scale. It’s almost a corollary of the ‘niche-oriented’ approach, meaning New Zealand companies should not compete on price. It is certainly a losing strategy when you don’t have the volume to sustain low prices against larger competitors.

Design is a way of bridging that gap, a tool and a guide to how to think differently about your company and its products that will allow for a high value approach. It’s not the only way, but it appears to be a way that many of the companies have managed to secure their place in their chosen niche.

NEW ZEALAND AS A TECH EXPORTER

Is being a ‘New Zealand technology company’ a hindrance or a help? There is a mixed set of reactions to this question, with three broad responses: it’s a hindrance; it’s an irrelevance; or it’s a benefit.

Some New Zealand companies see the prevailing global view of New Zealand still centering on our landscapes and food production, or maybe the Hobbit movies. In that context, saying you are a technology company from New Zealand is like saying Jamaica has a bobsled team – it’s jarring, out of context and perhaps negative. At its worst, laughable. Those companies tend to hide the fact they are from New Zealand, or at least they don’t make it obvious. It’s an understandable perspective and they need to make the right decisions for themselves, although we think they miss an opportunity.

New Zealanders exemplify pōtiki when they take on the world with their technology and innovation from the bottom of the globe. New paradigms are developed from the edge, not the middle.

Other New Zealand companies think it’s irrelevant – they compete globally and don’t hide the fact they are from New Zealand, and for some target customers and stakeholders it’s of no concern. Certainly, when we’ve spoken to US-based investors (as an example), they don’t care where you are from, what your accent is like, or what school you went to – they will judge you on the quality of your ideas. In places like Silicon Valley, meritocracy is an accepted way of working, so it’s not relevant. In other markets, country of origin may matter more. Largely, though, these companies tell us there are pluses and minuses to being from New Zealand, and the minuses are mostly operational rather than perception – it means they must travel more frequently, it means they have to make phone calls at strange times, it might mean they struggle to hire talent at the level they need. If it gets ‘all too hard’ they might relocate a few key people from their company into the overseas market, particularly in sales and management. But even those who have made that choice usually consider themselves a New Zealand company.

Then there is a growing group who see the fact that they come from New Zealand as a benefit in their global growth. One company told us they see it as worth a 15–20 percent premium for them. So, what is it about these companies, and the way they think about being a New Zealand technology company, that gives them this edge? What benefits might we be missing that we can learn from them?

Read part 1 here.

Read part 2 here.

Read part 3 here.

Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription, an Idealog t-shirt and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).